An Upside to the Downturn?
By Megan Martin
For a lot of companies, the idea of recession causes a knee-jerk reaction: cut spending, expedite layoffs and freeze hiring. With the troubled state of the current market, it’s natural to feel uneasy—but Gwen Martin, co-founder and managing partner of NumberWorks, LLC, recommends a different approach:
“Companies should be more forward-thinking and strategic than ever,” says Martin. “They need to look towards where they want to be positioned in the future, versus where they feel they are now.”
While the glass might look nearly empty to many, organizations who emerge from financial crises in good shape are those whose leaders are able to step back, take a deep breath and see today’s economic turmoil as an opportunity for future growth.
Here are some tips for strategically positioning your company as you prepare your company for a bright future.
Look Before You Leap
In the midst of an economic downturn, it’s easy to forget that most economic crises are actually short-lived. Companies that emerge strongest from local, regional or global economic problems are those that are able to keep a cool head, even in the midst of unpredictable economic times.
How you respond to uncertainty is key, not only for employee morale and your bottom line in the short-run, but for your company’s future reputation as well. What you do when the chips are down affects how potential clients and employees see your company—doing things in haste can destroy a company’s image and even repel top talent in the future.
“Word spreads quickly when an employer lets people go or rescinds job offers. That can hamper future recruiting efforts,” says Kelley Holland in her Nov. 23 New York Times article, “Under New Management: Why Should Recession Stop the Recruiters?”
Martin mentions that not hiring or laying off can lead to other problems as well. “In the midst of companies trying to be resourceful and ’do more with less,’ so many internal employees are having to work overtime. Unfortunately, this too often leads to employee burnout, which is ultimately detrimental to any company,” she says.
It’s a better idea to consider where you want to be when markets improve, and what you can do now to secure that future.
Retain Top Talent to Develop Future Leaders
Not only do companies risk scarring their image by massive layoffs, but they can also ruin their chances of developing current top talent into future leaders. “Overall, companies are definitely being more conservative in their hiring initiatives during this recession,” says Martin. “But it’s important for them to retain their top talent, as well as seek out the newly available talent in the marketplace.” Faced with pressure to downsize, it’s easy to forget that retaining talent is crucial during a recession. Many of the most successful company leaders began in entry-level positions and rose to the ranks of top executives.
To keep top employees motivated and loyal during troubling times, it’s important to communicate with them about what’s going on within the company, and to show them that you value what they do. Many companies—after treating employees poorly during an economic downfall—find that their top performers have already found positions elsewhere by the time markets improve.
“Keeping people focused amid mounting layoffs often requires a more emotional approach,” says Jena McGregor in her Nov. 3 BusinessWeek article “Keeping Talent in the Fold.” “Talking about the company’s nonfinancial goals can help prevent productivity from grinding to a halt.” Have conversations that keep people focused: Gear employees toward improving specific services, or working toward improved customer service.
Martin agrees, and recommends that if layoffs do occur, it’s important for managers to take the time to explain the situation to other employees, rather than ignoring what happened.
“If there are any changes in direction, it is essential that employers clearly communicate those changes to their employees, and in a timely fashion,” she says. “Honest communication is key, and should help boost employee morale and trust in their employer.”
Martin also notes that now may be an ideal time to train, educate and mentor top talent in preparation for the future. It’s often more important to invest in training time during periods of slower growth, so focus on truly nurturing your talent.
“Invest in training and doing things to offset potential feelings of doom-and-gloom such as fun, inexpensive group activities,” she says. “Also, encourage your management team to promote positivity, as it runs both from the top-down and bottom-up.”
Don’t Fire—Hire!
The truth is that massive, spontaneous layoffs just don’t work in the long-term. Actually, a recession can be an excellent opportunity to pick up top talent that has been left stranded by other organizations. Consider hiring past top consultants or strong former employees who were picked up by companies that are now laying people off.
“This is a great time for employers to increase the level of talent in their workforce. There's a lot of sharp talent in the marketplace right now that hasn't been available for some time, and this is an excellent opportunity for companies to beef up their talent and hire,” says Martin.
Some employers think that a poor market prevents them from losing employees, as many employees are willing to stay—but don’t be short-sighted. Recognize that the current economy might just be the perfect opportunity to upgrade staff. Your best strategy may be to evaluate your current staff, and replace “B”- and “C”-level talent with top performers that are in search of opportunities.
Think about new products, services, technologies or other advances your company would like to make, and take on top-performing employees to start up new projects. You might also consider employing consultants to help your business run more efficiently. Rather than discontinuing growth strategies, think about innovation—what do you need to do to secure a bright future, and who are the best people to join forces with you on that mission?
If you can stay calm and look at the big picture now, there’s no telling what the future may hold.
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